A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

June 02, 2007

BUBBLETALK - New thread to talk about the epic historic housing crash firmly underway. And anything else on your mind...Keep it clean, use tinyurl, don't post full articles, and let me know what I missed. Oh, man, is this getting ugly now...

The mortgage sector before the age of securitization was shaped like a cylinder in which risk was evenly spread throughout the entire sector, thus all mortgages share the aggregate cost of default. This even spread of risk premium is viewed as market inefficiency.

Securitization through collateralized debt obligations (CDO) permits the unbundling of generalized risk embedded in all debt instruments into tranches of escalating risk levels with compensatory higher returns, and in the process squeezes additional value out of the same mortgage pool by maximizing risk/return efficiency.

The geometry of CDO securitization transforms the cylinder shape of the mortgage sector to a pyramid shape, with the least risky tranches at the top and the more risky tranches with commensurate premiums toward the bottom, so that a greater aggregate risk premium can be squeezed out by the security packagers and investors as profit. This extra value, when siphoned off repeatedly from the overall mortgage pool, requires an ever larger base of subprime mortgages in the new pyramid shape, thus increasing the systemic risk further.

Subprime borrowers are no longer just low-income borrowers. They include high-income borrowers whose incomes and collateral value do not provide sufficient reserve for sudden changes in market conditions. A subprime borrower is one who over-borrows beyond prudent standards. The extra risk-premium value thus taken out of the mortgage sector contributes to the increase in liquidity to feed the debt market further, pushing the low credit standard of subprime lending further down. Once prime-credit customers have borrowed to their full credit limits, growth can only come from lowering credit standards, turning more prime borrowers into subprime borrowers.

This is the structural unsustainability of CDO securitization, irrespective of the state of the economy, since risk of default is shifted from the state of the market to the direction of the market. Any slight turn in market direction will set off a downward-spiral crisis. The initial upward phase of this cycle is euphoric, like any addiction, but the pain will come as surely as the sun will set in the downward phase.

Not many economists or regulators have yet focused on this structural defect of CDO securitization. The recent congressional hearings on subprime mortgages completely missed this obvious structural flaw.

Essentially the Wall St. wizards found a way around government oversight (regulations) and exploited the heck out of it. So like the '20s, we once again have had an unrestrained lending boom.

Here's how the DOW preformed during the era (from http://www.buyandhold.com/bh/en/education/102299.html):

*Here are some random, important dates which give you a sense of the volatility in 1929 and how folks were undoubtedly suckered in after the Crash, only to see their life savings wiped out by July 8, 1932. The "Roaring 20s" really didn't get off to a spectacular start, at least as far as the Dow was concerned.1/2/20 Dow Jones - 108.7612/31/20 - 71.95 [market meandered up then...]5/20/24 - 88.33 [the low until long after the Crash]12/31/27 - 202.40 [high close for the year]12/31/28 - 300.00 [high close for the year, now we're really cranking]9/3/29 - 381.17 [high for bull market]9/30/29 - 343.4510/23/29 - 305.8510/24/29 - 299.4710/25/29 - 301.2210/26/29 - 298.9710/28/29 - 260.64 [market closed the 27th]10/29/29 - 230.07 [HELP!!!]10/30/29 - 258.47 [Buy the dip! Buy the dip! C'mon!!]10/31/29 - 273.51 [See, I told you to Buy the dip!]11/13/29 - 198.69 [Homer Simpson: Dohh!!]11/21/29 - 248.49 [Just your basic 25% one week rally]12/31/29 -248.483/31/30 - 286.10 [Yup, no sweat. I got this market thing all figured out]4/17/30 - 294.07 [the peak]12/31/30 - 164.587/8/32 - 41.22 [90% decline from 9/3/29...and also the lowest level for the next 67 years]

Leaders from European states have told the Bush administration that Paul Wolfowitz must resign from the World Bank in order to avoid a vote of no confidence, it was reported today.

The beleagured Mr Wolfowitz is due to respond formally today to charges that he broke bank rules by ordering a promotion and pay rise for his companion, the bank's Middle East expert, Shaha Riza.

But his case seemed increasingly like a lost cause amid indications of mounting European pressure, particularly from Germany, that Mr Wolfowitz, formerly the number two at the Pentagon during the Iraq war, should quit now.

The New York Times today reported that European leaders have told the White House that Mr Wolfowitz must resign to avoid a vote next week by the bank's board - made up of representatives of the governments that jointly own shares in the bank - declaring that he no longer has its confidence.

The board reportedly was drafting a resolution reflecting its view that the relationship between Mr Wolfowitz and the governing body of the bank had "broken beyond repair", in what would be a further humiliation for the bank president.

"The administration has been told that its battle to save Mr Wolfowitz cannot be won," a European official told the New York Times. "His relationship with the board is not only damaged. It is broken."

Mr Wolfowitz's lawyer, Robert Bennett, said his client would submit "a powerful presentation that shows without doubt that there is no bad faith on his part, no conflict of interest on his part" and that a premature judgment raised doubts about the bank's credibility.

Mr Wolfowitz has until the end of today to make "final comments" on the draft findings of a panel that investigated his role in awarding a pay and promotion package to Ms Riza. The panel is expected to present its final report to the 24-member board early next week.

The Bush administration is also coming under Democratic pressure in Congress to dump Mr Wolfowitz rather than confront the Europeans in a no-confidence vote.

"We do not believe the bank's mission or US interests would be advanced by such a vote," said a letter signed by the Senate majority leader, Harry Reid, and other top Democrats.

The bank board committee found last week that Mr Wolfowitz violated conflict of interest rules and the terms of his contract when he ordered a pay and promotion package for Ms Riza upon becoming president in 2005.

When Mr Wolfowitz arrived, Ms Riza was seconded to the state department as bank rules forbid romantically involved couples from working together. Mr Wolfowitz has said he raised the issue of a potential conflict of interest, and asked to be excused from the matter.

Mr Wolfowitz said he took the issue to the ethics committee of the board, and after extensive discussions with the chairman, the committee's advice was to promote and relocate Ms Riza.

Mr Wolfowitz has become increasingly isolated. Last week, one of his closest aides announced his resignation.

Kevin Kellems, a former spokesman for the US vice-president, Dick Cheney, was hand picked by Mr Wolfowitz to join him at the bank.

Where is the crash. Florida, Las Vegas? That's not a crash. Some mortagage companies are going down but i am not seeing a crash. Utah, austin tx and other tx area, idaho, washington(st), oregon seem to be booming, not crashing.

I need some feedback. Here in Southern California, my neighbor just sold his house for about 10 under asking price. I am now thinking of cashing in and bubblesitting. Now I know some of you will say 'you missed your chance, the peak is long gone' but again, my neighbor just sold his!....would you guys try to sell the house so late in the game if you were me? Theres gotta be some more suckers out there.

I hate to say it Keith, but the boom is still on, in my area. They are building a ton of houses, a ton. I can't emphasize enough how many houses they are building. I don't know where they will get the water and electricity for all the 2-3-4000 sq. ft. houses, really. Major crash coming, but probably not for another year, at least. Zero down, builder pays closing costs, sub-prime lending still going strong. They just built a new lumberyard across the street from an existing lumberyard. Maybe that is a sign. This bust will be huge when it hits.

Want2Bubblesit: Depends very much on where you are living in SoCal, but if I owned today (I sold six months ago after eight months on the market and sales price of $75K less than original asking), I would surely sell and make sure I am the cheapest comp in the area by 5%-10%.

I assume you're not upside-down and can afford this.

There *are* SoCal areas immune to a bubble collapse/crash, no doubt. If you're on the ocean -- on it, not 5 miles inland under the 405 -- you are golden (in houses, not condos). Same with super-exclusive enclaves like Bel Air, Beverly Hills, Malibu, Rancho Palos Verde, Newport Beach, La Jolla, Los Feliz Hills, etc. Values will decline a bit and sales prices are going lower already, but the "they're not making any more land" actually is the truth when you're talking about a fancy neighborhood surrounded on two or three sides by mountain park or ocean.

But what is that, 10% of the SoCal single-home housing stock? 5%?

For the rest of us, all signs point to big trouble. I'm seeing open houses everywhere, on WEEKDAYS. Have you ever seen such a thing before? I haven't and I've been in SoCal for much of my life.

Zillow your house regularly and check listings and sales prices. Count the For Sale signs. Weather is beautiful right now, LA economy is in pretty good shape for middle/upper class, and of course realtors are relentlessly claiming to would-be buyers that everything's back to normal and NOW is the time to buy -- just like always!

Good luck. If you sell, sock that money away in bonds or even CDs and money markets, which can get you a safe 5% per year, which is a helluva lot better than *losing* 5%-20% per year, which is happening here.

Mort: I see some residential construction still ongoing in the Mojave, around Vegas, Phoenix, etc., too. But here's the thing:

Lead times on tract-home developments are several years long. Lots of projects in the pipeline finally got local/county & zoning approval, water lines, etc.

What I've *really* noticed in my travels is how many of these aren't being fully built out -- as in, streets and utility boxes and lots all ready for a slab and sticks, but they never arrive. I have seen this especially around Sacramento, Reno, Tuscon, parts of suburban Denver & Boulder and the edge 'burbs of San Diego. (Yes, I drive a LOT for work.)

During the winter I just assumed they would start again in spring, especially in the snowy places. But now it's almost summer and I see nothing going on.

Let's see, sales off 40% or more in each of those markets, and average sales prices down 5 to 10%. Sounds like the market volume is off 43% or more in those markets. I guess it's only a crash at this point if you have to sell, or if your income is connected to transaction volume (home inspector, realtor, mortgage broker, builder, plumber, catering truck owner, lumberjack, electrician, etc.)

I have a friend who bought a house at the peak in 92-93 in Palos Verdes and her home lost ~40% of it's value from that time until 2001, when she finally saw the value she bought it for come back. So to say that the ritzy areas in LA will not get hit by this turndown is delusional. In fact the pricier areas often see the largest swings both ways. Read some history and pull up the stats. Southern California has seen a bubble before and it won't be different this time...

The housing down here in Huntington Beach is another good example of over-priced and poorly built places along with coast.

Many of these "bowling alley" style houses are still priced at 1.5mil and up - and of course, they are still sitting empty.

Anonymous said... I have a friend who bought a house at the peak in 92-93 in Palos Verdes and her home lost ~40% of it's value from that time until 2001, when she finally saw the value she bought it for come back. So to say that the ritzy areas in LA will not get hit by this turndown is delusional. In fact the pricier areas often see the largest swings both ways. Read some history and pull up the stats. Southern California has seen a bubble before and it won't be different this time...

OK Northern VA housing prices are not crashing. Inventory is way up though and there are slight pricing adjustments. But people are still trying to sell $430,000 townhouses around here and some folks are buying them. Keith please explain what's wrong with Virginia why aren't we crashing?

"only 19,569 Active listings in Los Angeles countyone of the the most populous counties in the USwhere is the crash?The inventory is too low "

Inventory is way up in L.A. County. Many homes that are for sale have been on the market for months. I guess people came to realize that $600,000 for a crap box in Pacoima, Panorama City, or Van Nuys (the areas of the county most heavily infested with illegals) is just too ridiculous.

"Interesting take on the bubble, focuses on some of the positive aspects of what may be the aftermath..."

I found the article to be poorly structured (articles need to get to their point in the first few paragraphs to captivate the attention of the reader rather than get into boring details) and offered weak support for its thesis -- support which mostly cosisted of specious arguments and faulty cause and effect conclusions.

Key West, one of the most overheated markets in the US, has a record number of properties on the market, over 1100 (about triple from normal for our very small island).I've been writing about this at my Key West Chronicle Blog located at

All along the Southern Ca. coastal regions (i.e. Belmont Shore, Seal Beach Huntington Beach, Aliso Viejo, etc..) there are many places for sale - and no buyers.

Prices are still too high, and they will have to come *way* down before any of these over-prices shacks start selling.

That's the reality, and it's betterto make judgements on the market based on what you see (i.e. all the for-sale signs), rather fudged statistics or media hype.

Anonymous said... "only 19,569 Active listings in Los Angeles countyone of the the most populous counties in the USwhere is the crash?The inventory is too low "

Inventory is way up in L.A. County. Many homes that are for sale have been on the market for months. I guess people came to realize that $600,000 for a crap box in Pacoima, Panorama City, or Van Nuys (the areas of the county most heavily infested with illegals) is just too ridiculous.

Pretty scary stuff ... which most people don't have a clue about, but which will severely impact many financially.

~~~Anonymous said... New geometry of debt securitization

The mortgage sector before the age of securitization was shaped like a cylinder in which risk was evenly spread throughout the entire sector, thus all mortgages share the aggregate cost of default. This even spread of risk premium is viewed as market inefficiency.

Securitization through collateralized debt obligations (CDO) permits the unbundling of generalized risk embedded in all debt instruments into tranches of escalating risk levels with compensatory higher returns, and in the process squeezes additional value out of the same mortgage pool by maximizing risk/return efficiency.

The geometry of CDO securitization transforms the cylinder shape of the mortgage sector to a pyramid shape, with the least risky tranches at the top and the more risky tranches with commensurate premiums toward the bottom, so that a greater aggregate risk premium can be squeezed out by the security packagers and investors as profit. This extra value, when siphoned off repeatedly from the overall mortgage pool, requires an ever larger base of subprime mortgages in the new pyramid shape, thus increasing the systemic risk further.

Subprime borrowers are no longer just low-income borrowers. They include high-income borrowers whose incomes and collateral value do not provide sufficient reserve for sudden changes in market conditions. A subprime borrower is one who over-borrows beyond prudent standards. The extra risk-premium value thus taken out of the mortgage sector contributes to the increase in liquidity to feed the debt market further, pushing the low credit standard of subprime lending further down. Once prime-credit customers have borrowed to their full credit limits, growth can only come from lowering credit standards, turning more prime borrowers into subprime borrowers.

This is the structural unsustainability of CDO securitization, irrespective of the state of the economy, since risk of default is shifted from the state of the market to the direction of the market. Any slight turn in market direction will set off a downward-spiral crisis. The initial upward phase of this cycle is euphoric, like any addiction, but the pain will come as surely as the sun will set in the downward phase.

Not many economists or regulators have yet focused on this structural defect of CDO securitization. The recent congressional hearings on subprime mortgages completely missed this obvious structural flaw.

Anonymous said...only 19,569 Active listings in Los Angeles countyone of the the most populous counties in the USwhere is the crash?The inventory is too low

May 13, 2007 8:37 AM

----------------------------

Most of the buying of the last 16 monts has been by la street gangs. They pay inflated prices to get cash back at close. When New century couldn't do those deals anymore they closed up.

May 13, 2007 2:05 PM

the fact is Phoenix 60,000 LA 19,000All I am saying is the inventory is low douche bag.(you are priced out and will always be priced out) if you don't like it move to ARIZONAyou can make some deals there

Two suspects have been arrested in connection with the bombing at the Luxor that killed 24-year-old Wuilibaldo Dorantes Antonio.

Police have arrested 32-year-old Omar Rueda-Denvers, who is from Panama. They also arrested 27-year-old Porfirro Durate-Herrera, a Nicaraugan. Police say both men are in the country illegally.

We've got enough problems without the plague of illegals OUR government is forcing upon us. What sort of statement is America making to the world? Give us your criminals, your welfare cases, your breeder cows, America has plenty of money?

The positive aftermath of this massive assets liquidity controlled deflation will be normalized Affordability Index. Foreclosure should peak around 4th quarter of next year. Foreclosure should tamper off around 2010 to 2011.

Affordability Index should normalize around 2012 to 2013.

That means most college graduated will have a chance to purchase a condo and newly weds will be able to purchase a single family starter home without getting into a funny loan, provided the federal reserve hold the course.

I got out the Yellow Pages and called all of the Agents I could for a few days, marketing my home, without the MLS and especially to Buyer Brokers.

I Told Real Estate Clerks if they had a buyer to let me know, as my home was for sale and was not on the MLS yet! They smell a deal.

Then when an agent bought in a serious buyer, after the offer was reduced to a contract, I informed the Agent that her commission was 2% for representing the Deal, total commission, we settled on 3%, but they are more desperate now.

We had an accord,1.50% paid by me and 1.50% paid by buyers.

Worst case, your "word of mouth" does not work and you have to engage someone.

U.S. government bond prices slid on Friday, reversing early gains as stocks climbed on easing inflation concerns, which sparked hopes of earlier rate cuts by the Federal Reserve than had been expected.

Not anymore. Today, short sale, or discounted, listings are on the rise in the Bay Area and San Joaquin County due to cooling home sales, soaring foreclosure rates and the resetting of easy-money loans into higher mortgage payments, observers say.

In a short sale, the home is sold at a price that's short of the mortgage amount, provided the bank approves the sale. The sellers, typically facing a default notice after missing several mortgage payments, avoid the stigma of foreclosure and the lenders minimize their losses.

Short-sale spikes have happened before in real estate, most recently in the early 1990s when housing prices in California dropped steeply as interest rates rose and jobs were cut in the defense industry.

What's unusual about the current round of increases, observers say, is that many short sales are tied to the easy-money loans of a few years ago; this time there has not been a wave of job losses or steep drop in property values.

In early May 2006, there were hardly any short-sale listings in Fremont, Hayward, Newark and Union City, said Steve Dhillon, a Realtor with RE Realty Experts in Fremont.

One year later, almost 8 percent of homes on the market in Fremont were listed as short sales, according to data from the multiple-listing service used by Realtors. In Union City, 15 percent of listings were short sales, followed by 10 percent in Hayward and 7 percent in Newark.

Marshall noted that the last time short sales increased was in the early'90s when home values decreased as interest rates and unemployment increased. Back then, lenders were not doing 100 percent financing and other forms of creative financing; the standard loan had a fixed rate and buyers made bigger down payments.

The median price for all homes in the Bay Area peaked at $225,000 in January 1990 before dipping to $205,000 in January 1991, almost a 9 percent decline, according to DataQuick.

During an April 26 conference call with analysts, Perry said the company didn't sell a single dud loan in the first three months of the year because no one wanted to pay what he thinks they're worth. No way is IndyMac selling to a hedge fund for "pennies on the dollar," Perry said.

In that time, IndyMac's sour loans and foreclosed real estate ballooned 75 percent to $324 million.

"We are not going to fire-sell when we have the intent and ability and expertise to work through those loans and sell them ourselves," he said.

But Indymac and others who deal in Alt-A loans, such as Impac Mortgage Holdings of Irvine and Downey Financial of Newport Beach, may not have time to wait. The same problems shaking up the subprime market are now emerging in the Alt-A industry.

What's more, a Register analysis shows reserves for loan losses by these companies are not keeping pace with delinquent loans.

Never underestimate the ability of a Wall Street investment firm to find a new way to pawn off risky assets onto retail investors. The latest example? The initial public offering for Everquest Financial.

Everquest is a fledgling financial-services company that has been buying up equity interests in risky bonds backed by subprime mortgages from hedge funds managed by Bear Stearns one of Wall Street's biggest underwriters of mortgage-backed securities and other exotic mortgage-related bonds. The deal appears to be an unprecedented attempt by a Wall Street house to dump its mortgage bets.

The sales pitch for the IPO, which Bear Stearns is also underwriting, is that Everquest will "provide attractive risk-adjusted returns" to shareholders by investing in collateralized debt obligations (CDOs)—a sophisticated bond that's made up of pieces of lots of other asset-backed bonds.

The nine-month-old company expects to produce reliable earnings from the quarterly cash flows generated by the underlying "financial assets" in the 19 CDOs it either owns outright or has a majority equity interest in. Everquest's portfolio of CDOs is valued at about $720 million, of which nearly two-thirds were purchased last fall from hedge funds managed by Bear Stearns Asset Management, a subsidiary of the Wall Street firm.

But Everquest's portfolio could be a time bomb. A "substantial majority" of the CDOs are backed by mortgages to home buyers with risky credit histories, according to its filing with the Securities & Exchange Commission.

People are blaming the oil companies and not the weak US Dollar for the higher gas prices.

Shouldn't people be pressuring Treasury Secretary Henry Paulson to strengthen the US Dollar since 70% of all commodities is priced in US Dollar.

Why isn't there an internet campaign to ask the Federal Reserve to raise interest rate that would strengthen the US Dollar and lower gas price.

What is the effect of not buying gas on Tuesday May 15? If you need gas and don't buy on May 15 then you will either buy gas on or before Monday May 14 or on Wednesday May 16 or after. "Six of one and half a dozen of the other", but the net effect is still zero.

Some of the nation's drivers are trying to fight fast-rising gasoline prices by staging an Internet-driven "gas out" May 15.

The average price of gasoline nationwide topped $3 per gallon Friday; the nation's refineries have been experiencing production problems in recent weeks.

An Internet chain letter dated April 30 has been circulating around e-mail systems across the country urging drivers to avoid pumping gas May 15.

Jackie Beauchamp, 29, of Oshkosh said she received the e-mail a few days ago from her aunt. She said she is definitely participating.

"It is ridiculous when gas is costing me $70 to $80," Beauchamp said as she filled her Ford F150.

The unsigned letter suggests that a one-day "gas out" could result in siphoning off nearly $3 billion from oil company profits.

"Some people think $4 a gallon is on the horizon," said Jim Rink, an AAA Michigan spokesman. "If consumers balk at the rise they will curb their consumption and prices will come down."

Anonymous said... "Interesting take on the bubble, focuses on some of the positive aspects of what may be the aftermath..."

I found the article to be poorly structured (articles need to get to their point in the first few paragraphs to captivate the attention of the reader rather than get into boring details) and offered weak support for its thesis -- support which mostly cosisted of specious arguments and faulty cause and effect conclusions.

Then when an agent bought in a serious buyer, after the offer was reduced to a contract, I informed the Agent that her commission was 2% for representing the Deal, total commission, we settled on 3%, but they are more desperate now.

So, when I was the buyer I did the same thing. I saved thousands.

Yes, very skillful, but when you woke up the next morning you still had to look at a prick in the mirror.

``If the expectation takes hold that low interest rates will continue regardless of the situation of both prices and the economy, then that could invite inefficient allocation of capital including real estate and the yen carry trade,'' Fukui said today in parliament.

The Bank of Japan doubled its benchmark overnight lending rate to 0.5 percent in February, saying that prolonging a low- interest-rate policy may spur overinvestment and asset bubbles. Low rates have encouraged investors to borrow in yen to buy overseas assets, the so-called carry trade that helped drive Japan's currency to a 21-year low against its trading partners.

Yen "Carry Trade" is the liquidity pump that is pouring money in the path of less resistance around the world.

On the yen-carry trade, Wan Suhaimi said it raises perpetual concern as most of the money coming in here was borrowed, including those from hedge funds.

“Hedge funds are not always a bad thing. Some of them capitalise on excess liquidity and this in some ways keep market activity robust.

“However, it is difficult to estimate exactly how much yen-carry trade is in Malaysia as it is very fluid with movement of funds,” he said.

Wan Suhaimi said although the yen-carry trade in Malaysia was possibly smaller than that in Singapore, Hong Kong and other emerging markets, any unwinding of the yen-carry trade or panic selling would have serious repercussions here.

Khoo, meanwhile, said there had been some unwinding in yen-carry trade but the interest rates differential still made the yen attractive.

“People borrow the yen for a variety of reasons, including investments in the stock market as well as other ventures. If the interest rates in Japan go up, it would result in some unwinding of yen-carry trade but we do not have an estimate of how much yen-carry trade is conducted here in Malaysia,” he said.

Japan's central bank governor on Thursday made the case for a gradual increase in interest rates, warning that keeping rates low could fuel the so-called yen carry trade and destabilise the country's economy.

"If the BoJ acts too slowly in adjusting interest rates, that would raise the possibility of [upside risks] occurring and would mean that we are not fulfilling our responsibility."

Mr Fukui's comments came as European central bankers made it clear that tighter monetary policy was necessary: Jean-Claude Trichet, European Central Bank president, on Thursday signalled that eurozone rates would rise to 4 per cent in June, while the Bank of England raised its main interest rate by a quarter of a percentage point to 5.5 per cent, its highest in six years.

On 5/4 (May 04, 2007 11:39 PM) in another thread, Hayley said regarding health care costs:“And by the way, I feel as though, similar to housing, I played the game responsibly (including taking care of myself) and I'm paying for the medical care of people who "can't afford" health insurance or pursue smoking and obesity with abandon.?------------------------Would you also have a problem paying into a system that helps cover the medical costs for people with a catastrophic health situation? You can live responsibly, eat right, and take good care of yourself until one day your liver or kidney suddenly quits and you need an organ transplant; you contract a debilitating illness, become badly injured in a freak accident, or get shot.

This happens to ordinary people every day; don’t think that it could not happen to you! A person’s wealth should not factor into the decision of whether or not they receive adequate medical help when needed. We are the wealthiest country in the world; we could certainly afford a universal health care system by dismantling our present “for-profit” system, studying other countries’ health care systems to learn what works and what does not work, and then implementing an effective “for-all (LEGAL CITIZENS)” health care system here in the US.

As was pointed out in the GM thread a few days ago, the cost of health care is one of the factors making American-made products uncompetitive in the world market. It is one thing if people suffer and die due to the unaffordability of health care, but now that corporations are suffering and dying thanks to the astronomical cost of health care, perhaps this country will finally change its system.

But don’t hold your breath. And by the way, I am not an obese, junk-food eating smoker either.

House of cards or solid foundation? THE SAVAGE TRUTH | What will housing slowdown do to the economy?

May 14, 2007TERRY SAVAGE savage@suntimes.com Alan Greenspan said he was puzzled about why the sub-prime mortgage mess hadn't had a greater impact on the economy. That was last month. The latest economic data show that indeed the combined crunch of higher mortgage payments and higher energy prices are sapping economic growth.

A chilling effectClearly, the mortgage mess impacts all homeowners, even indirectly. If the house down the block is sold at a foreclosure auction, how much is your home worth? That thought is chilling for millions of Americans who count their home as their most important asset -- both financially and psychologically.How far can home prices fall? It depends on which economist you ask. Months ago, Robert Aliber, retired University of Chicago economics professor, told me home prices would drop 30 percent. The forecast was so shocking that I hesitated to print it.

The latest gloomy forecast -- backed up by compelling data -- comes from Gary Shilling, frequently bearish, but even more frequently correct. To be blunt, Shilling is forecasting a drop of 40 to 50 percent in home prices in the more overpriced areas such as California, Florida and Las Vegas, and the ordinary homeowner, he says, could see a decline of 10 to 15 percent in the value of a suburban home.

Shilling's forecast is based on the historic value of homes, adjusted for what he calls the "McMansion effect" of today's larger homes being worth more. Using historical data compiled by Robert Shiller, he says home prices would have to drop 45 percent to get back to their historic normal levels.

Existing-home prices peaked in October 2005, and are down about 4 percent on a national basis through March 2007. But Shilling says the worst is yet to come, because he estimates it takes about 18 months from when home prices first start to slide for homeowners to recognize that this is not a fleeting blip.

Now the "interval of denial" is about over, and homeowners will start realizing that if they want to sell, they'll have to cut prices, Shilling says.

Even worse, he says there is no way this problem can be confined to the housing market. He estimated that overbuilding has resulted in at least two million "excess" homes -- a factor that will depress not only home building, but related industries in the coming years. Already, housing starts have fallen 33 percent from their peak of 2.265 million in January 2006 to 1.518 million in March. Shilling predicts an additional 25 percent decline in housing starts, and says there is no way that capital spending by businesses can pick up the slack. Ugh!

Shilling predicts "an American recession to commence later this year, and to extend globally in 2008." Time will tell. And that's The Savage Truth.

HSBC Finance Corp., a division of HSBC Holdings Plc, said profit slumped 39 percent in the first quarter. The U.S. mortgage lender flagged loan defaults may rise.

Net income in the three months to March 31 fell to $541 million from $888 million last year, mainly as HSBC Finance had to almost double the provisions set aside for credit losses to $1.7 billion, the Illinois-based company said in a statement filed to the Securities and Exchange Commission today.

``The delinquencies in adjustable mortgages are going to increase into the year,'' Krista Yue, an analyst at Deutsche Bank AG, said by phone from Hong Kong today. The ``continued drag of the U.S. mortgage portfolio is going to limit any meaningful earnings expansion in 2007'' for HSBC Holdings, she said.

HSBC Finance, which generally serves consumers with limited credit history, posted a 19 percent drop in net income last year as loan defaults in the U.S. climbed

The International Monetary Fund is still considering whether to sell 400 tonnes of its gold stocks to help plug a widening income shortfall, the head of the global lender, Rodrigo Rato, says.

The IMF announced on January 31 that it was considering recommendations by an independent panel, including the sale of gold, after demand for IMF financial assistance has almost dried up, prompting an income shortfall of $US165 million ($A198.54 million) for fiscal 2007.

The IMF forecast that income gap would widen further to about $US224 million in the next fiscal year.

"If the fund is to remain effective and legitimate, it must be properly financed," Rato, the IMF's managing director, said in text prepared for a speech to British members of parliament.

"I will make specific proposals based on the report (of the panel) over the next few months," Rato said, listing gold sales among the measures under consideration.

The gold sale is one of several measures recommended by the committee that included former US Federal Reserve Chairman Alan Greenspan.

The 400 tonnes of gold represents about one-eighth of the IMF's 3,217 tonnes (103.4 million ounces) of gold stocks, and it is worth about $US68.4 billion at current market prices of around $US669.00 an ounce.

China will continue to push forward yuan exchange-rate reform, because it is in its own interest to do so, a senior Chinese finance ministry official said Tuesday.

"Given the large amount of speculators, interference will only disrupt reform of China's exchange-rate regime," said the official, who spoke on the condition of anonymity.

He was briefing a group of reporters ahead of strategic talks between the U.S. and China later this month.

China isn't pursuing a large trade surplus and seeks equilibrium in its balance of payments, the official said, reiterating Beijing's stance on its trade imbalance.

The remarks by the ministry official help set the tone for the second meeting of the Strategic Economic Dialogue between the U.S. and China in Washington next week. Chinese Vice Premier Wu Yi will lead a delegation of more than a dozen minister-level officials at the talks.

U.S. Treasury Secretary Henry Paulson faces enormous pressure from the U.S. Congress and domestic interest groups to achieve concessions from his China counterpart on issues ranging from the U.S.'s massive trade deficit with China and market access for U.S. firms.

Meetings between Cabinet-level delegations will take place May 22 and 23. Chinese officials will meet with the U.S. Congress on May 24.

If China start floating their currency whereby the Yuan were to become stronger and the yen were to become weaker then large Chinese companies like "Bank of China" could buying interest in big Japanese companies like Mitsubishi, Mitsui, Sumitomo, and Yasuda.

The national median existing single-family home price in the first quarter was $212,300, down 1.8 percent from a year ago when the median price was $216,100, according to the NAR's quarterly survey of housing market conditions.

"It appears the worst of the price correction is behind us," said Pat V. Combs, NAR's president and vice president of Coldwell Banker-AJS-Schmidt in Grand Rapids, Mich., in a prepared statement.

Tuesday May 15, 12:04 pm ET

What a 'tard. So what you're saying is that after a 1.8% nominal decline or a ~5.x% real decline (adjusted for inflation) housing will pick back up the clip of 10% a year. Small setback, huh Pat? Then we'll rocket up to 10x income for a house? Idiot.

According to http://money.cnn.com/ prices are continuing to fall and will until 2008. According to the NAR, Comb: "It appears the worst of the price correction is behind us," she said. "More stable home prices and declining mortgage interest rates are increasing buying power, which should encourage potential buyers who've been on the sidelines."

Tampa Bay area home sales are sluggish, but one type of property is turning over faster than it has in years: realty offices.With half as many homes selling this year as during the boom in 2005, Realtors are closing, selling or consolidating their physical property.

Southern California home sales plunged to a 12-year low for the month of April, dragged down by a dearth of transactions at the lower end of the market even as prices held steady, data released today showed.

Yet nearly a third fewer homes in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties closed escrow last month compared to a year earlier for the worst April showing since 1995, DataQuick found.

Among new and existing homes, 19,269 escrows closed in April , a 28.9% drop from April 2006 and a 12% decline from March. That's the fewest number of homes sold in the month of April since 1995, when 15,303 homes sold.

Can you say job losses? I should have saved the article but there are an astounding number of registered real estate agents in CA. I believe they will be adding their homes to the list of available inventory as well.

An investigative journalist has busted the lid off of A & E's "Flip This House" reality show, discovering that the featured flipper in some episodes was actually a real estate con artist who didn't actually buy the house(s) he supposedly was flipping!

Shoddy repairs, fake landscaping, posing real estate agents, etc, It was ALL staged for the camera!

...This has caused an enormous influx of wealthy rootless cosmopolitans to settle in London, where the great majority of their income is tax free, either because it involves one or other illicit activity abroad or because, in the financial services business, good lawyers can structure their clients’ activities and remuneration optimally. Since taxes on the average Briton have at the same time risen inexorably, as has government spending, the result has become a two-tier society, in which untaxed foreigners occupy the real estate that Britons who did not inherit it have no hope of owning.[link]

The crushing disappointment of the bubbleheads is clearly on the horizon, and the shorter term is a reasonable trade-off on the risk of higher interest rates. Here’s a mild surprise: For the kind of house you’re interested in, average values were up almost one percent in April.By Greg Swan

There is no better opportunity!! Our government is getting ready to amnesty another 15-20 million immigrants which will only give the green flag to the rest of the world to sneak in. US population heading to 400 million soon!!!

Keith,Local Orlando news flash. A 34 story, twin tower was slated to begin construction across the street from me in January, 07. It never happened, so I thought it was never going to happen.Well, today, May 15, they broke ground.Total, 68 story's, well, again, Twin Towers at 34 stories each. Five year build out, condos.

All three countries have similar problems. In Britain, housing prices around London have soared far beyond the range of average or even affluent Britons. This isn’t just a question of monetary policy, which has been over-expansive but not excessively so. More important has been the increasing dichotomy between foreigners, who are not taxed on their “worldwide income” and Britons who are.

This has caused an enormous influx of wealthy rootless cosmopolitans to settle in London, where the great majority of their income is tax free, either because it involves one or other illicit activity abroad or because, in the financial services business, good lawyers can structure their clients’ activities and remuneration optimally. Since taxes on the average Briton have at the same time risen inexorably, as has government spending, the result has become a two-tier society, in which untaxed foreigners occupy the real estate that Britons who did not inherit it have no hope of owning.

if i worked at chrysler, i would be watching my back. this private buyout by cerberus, does not bode well for the workers at the company. i figure they are going to screw them out of their retirement. all you hear on the boob toob is how this is so great because the company is staying in the united states, whatever that means......private equity firms.........nodbody knows who they are, or what they are doing.....welcome to the 21st century america.....

Your moderators should be ashamed for trying to attack and trap him.He did even say that he believes 911 happened for revenge, he said the attackers said that and then the idiot Goler, twists what he said and then let Rudy attack him. The joke is on you and rudy though because Dr. Paul was right!

You cornered DR. Paul with questions that the MSM tries to call conspiracy theory, but you let all those other clowns fumble around with what Dr. Paul is really known for and what he kicked their butts with in LA, and that is strict constitutionality and fiscal responsibility.

I live in a small, puke town in Wyoming. Probably the only state in the union that has confidentiality laws converning home sale prices. YES, home sale prices are TOP SECRET in this 1890s state of the union.

My property taxes are skyrocketing, they went up 100% last year and another 30% this year so I went to the county assessor to protest them. I had a SIT DOWN meeting with THE county assessor. THE COUNTY ASSESSOR NEVER HEARD OF ZILLOW.

But in case you've ever tried to do research on Wyoming on Zillow and were thwarted now you know why. We're still part of the WILD WEST.

Nor was it the job of the central bank to change the natural cycles of "greed and fear that have always been with us, and the ebb and flow of competition for market share."

"We cannot and should not try to prevent this process through a monetary policy that puts special emphasis on stabilizing asset prices or through regulatory policies that limit access to markets by qualified participants," [Fed governor Kohn] said.

"It's truly sickening to see the utter lack of loyalty shown to their long-term, producing, loyal AEs..."

oh give me a break.......so those that have been producing bogus mortgage contracts based upon absolutely nothing, should now be rewarded........keep dreaming pal.....you did your thing for the company and now the company is dumping you...get over it....

tell you what john, why don't you go over and get your precious little israeli army and you guys go and attack iran and may the best man win....no help from the americans this time.......you are on your own...

go spill your own blood and fight your own enemies.....you have a problem with iran getting a nuke? well then why don't we talk about the 400 nukes the israelis have ? huh? why not talk about them? israel does not even adhere to any nuclear arms treaty and they refuse to allow inspection of damona..

I've just been reading about Spain's banking crisis (due to the popping of their housing bubble) as well as the Euro currency crisis. It appears Spain may go into a depression and pull the Euro down with it. Or the Euro could crash on its own from its own internal tensions between countries. Should I be turning my dollars into Euros? It sounds like converting dollars into Canadian dollars might be better. Any thoughts?

I'm not (at all) against nationalized health insurance. What I was thinking about was someone who bitches that they can't afford health insurance (or won't pay the taxes to provide it) and then goes out and "affords" $500 for a car payment, $200 for a cell phone, $150 for morning coffee, etc.

By way of example on the implode-a-meter there's a story posted recently about a foreclosure "victim" whose story goes like this:

"Well we took out a home equity loan to pay off my husband's medical bills and so we could put in a pool."

It's not fun to pay for a health insurance, certainly not as much fun as it is to pay for a pool, (or now default on a pool), but should you have the option? If you own a home and decide not to carry fire insurance and it burns do you get to avail yourself of the services of habitat for humanity? Or, more to the point, if your uninsured (for whatever reason) neighbor's house burns down, how do you feel when he asks you to help pay for the new one?

Hardly anyone owns their home in CaliforniaA recent post at California Housing Forecast highlights another insightful report by Credit Suisse analyst Ivy Zelman. Ms. Zelman estimates that 40% of all loans made in 2006 in San Francisco are Interest Only loans. San Diego is tops at 42% and LA is right behind at 39%. This is compared to 23% on average across the country.

In 2006 71% of all mortgages had piggyback seconds on their homes in Los Angeles. Is anyone else freaked out about this? The scary thing about these reports is that interest only loans are only available to people with credit scores in the low Alt-A and up credit buckets. Many of the hard subprime borrowers could not have qualified for interest only loans. This would point to a future deterioration in loan performance in higher credit buckets as equity dwindles and people are upside down in their homes.

Same goes to a lesser extent for the piggy back seconds. While these were available to subprime borrowers many prime borrowers leveraged their good credit history to maximize financing on their homes. In an analysis of my company's loans originated in 2006 more than 40% of our prime loans (credit ranges 680 - 850) were exotic mortgages (IO, pay option or 2nds). This seems to corroborate Ms. Zelman's overall numbers (albeit from a much smaller sample size).

What does this portend? I believe it points to a spread of the contagion of delinquencies and foreclosures as seen in subprime and Alt-A buckets. When there is no equity, or negative equity the only reason to keep paying your mortgage is to protect your credit. When there is no investment to be saved, selling or walking away look mighty attractive.

Is in it funny that we in America, more so that in any western country, live in financial slavery due to high debt and high cost of basic things? - No medical care, - Predatory lending, - Property taxes - that fund ridiculous school systems and pay enormous pensions to teachers, compared to other workers,- Our best students cannot attend the best universities (top 20) because they have to basically mortgage their life away due to enormous student loans? I know I have a son who is finishing high school with a 4.0/4.0 GPA and a 34 ACT and there no way that he can attend a top 20 school without going into debt.

As far as housing goes, I was not able to buy 10 years ago when a house was valued at 160-180K in Chicago's north suburbs, now I can but I won't! I have been calling this mania since 2001. Nothing justifies housing prices valued at 350-450K. Without a doubt there will be a 70% price drop.

I live on the coast ... and I can tell you it won't be "golden" as you say here either.

The market decides pricing, and people who bought in this region recently will take heavy losses as well.

The coastal properties are some of the most over-priced and poorly built places.

Anonymous said... Want2Bubblesit: Depends very much on where you are living in SoCal, but if I owned today (I sold six months ago after eight months on the market and sales price of $75K less than original asking), I would surely sell and make sure I am the cheapest comp in the area by 5%-10%.

I assume you're not upside-down and can afford this.

There *are* SoCal areas immune to a bubble collapse/crash, no doubt. If you're on the ocean -- on it, not 5 miles inland under the 405 -- you are golden (in houses, not condos). Same with super-exclusive enclaves like Bel Air, Beverly Hills, Malibu, Rancho Palos Verde, Newport Beach, La Jolla, Los Feliz Hills, etc. Values will decline a bit and sales prices are going lower already, but the "they're not making any more land" actually is the truth when you're talking about a fancy neighborhood surrounded on two or three sides by mountain park or ocean.

But what is that, 10% of the SoCal single-home housing stock? 5%?

For the rest of us, all signs point to big trouble. I'm seeing open houses everywhere, on WEEKDAYS. Have you ever seen such a thing before? I haven't and I've been in SoCal for much of my life.

Zillow your house regularly and check listings and sales prices. Count the For Sale signs. Weather is beautiful right now, LA economy is in pretty good shape for middle/upper class, and of course realtors are relentlessly claiming to would-be buyers that everything's back to normal and NOW is the time to buy -- just like always!

Good luck. If you sell, sock that money away in bonds or even CDs and money markets, which can get you a safe 5% per year, which is a helluva lot better than *losing* 5%-20% per year, which is happening here.

What are the other benefits of the housing crash? I'm thinking one of the benefits, will be more pussy for the taking. It will push all those loser mortgage brokers and real estate losers out of the bars and club. I swear, every time I go out in this shithole phoenix, 1 in 3 people work in real estate that i meet. It's easy enough as is, but, it's gotta just get even easier, like picking oranges off a tree.

Keith, Would you please spare us the comments of that anon poster (who is apparently from phoenix) who uses HP as an outlet for his FU fantasies about degrading every woman in his path.

You know letting these guys read their comments on a public site legitimizes them and emboldens them to even more aggressive acts.

It's no different from anything else, the person who embezzles money and doesn't get caught thinks "well it must not be that wrong", the FB who lies on the mortgage app "well they wouldn't let me do it if it was that bad" or, in this case, "if my degrading comments pass muster with the moderator and noone stops me, I guess I really am OK here. It's just most people in the real world can't say so."

"Mortgage delinquencies are not expected to hurt the broader economy."

helicopter Ben said this today. ok........i guess he is right......i am going to leave hp now......i realize the whole thing was just my imagination....the chairman of the fed says there is no problem and there will be no problem....as soon as i can, i plan to sell my gold and my silver and get back my precious federal reserve notes and get into that wonderful and strong stock market and from now on i promise not to doubt cramer and the rest of the talking heads on cnbc......i realize i made a mistake in my judgement which caused me to start hanging around with negative people on hp.....i realize this was wrong.......the fed chairman this morning got my mind right and set me straight......i realize now, that i fell for the lie....that it is all a big bad dream....it is not really happening.........i feel better now.....i understand what the fed is trying to tell me.....i understand what helicopter ben is trying to say.......thanks hp for all the wonderful help you have given me over the last couple of months......now i feel much better. i feel a heavy burden has been removed from my shoulders......now i can breath........so ......so long hp.........i will talk to you guys later.......i am sure many of you will sooner or later come to your senses about all of this housing mess........i know that you believe helicopter ben, just like i do and i know in your heart of hearts, you realize as well as i did, that we all fell for the same lie........you too can change if you set your mind to it...i did and now i feel much better.....so long hp...........take care..........

Anon May 17, 2007 3:14 AM said:“I have a son who is finishing high school with a 4.0/4.0 GPA and a 34 ACT and there no way that he can attend a top 20 school without going into debt.”---------------Translated: “Waaa! I can’t get my son into a prestigious university without going into debt. Waaa!”---------------Why is it so important for your kid to attend a snooty college? Five years after he graduates, nobody really gives a rat’s @ss what school their employee came from – what matters is whether or not your kid can do his job well.

With a 4.0 high school GPA, a student should be able to receive a LOT of scholarships - the trick is to apply for as many of these, to start doing this early, and to not restrict him to just the top 20 schools.

Encourage your kid to take on a part-time job while in school, to help pay his own way – that will teach him some responsibility, in addition to his book-learning.

At age 29 I gave up a crappy job as a printer and went to college to study Engineering; got a few scholarships along the way but also had to work 20-30 hrs/week as well. Graduated with over $20,000 in student loan debt which I finally finished paying back last year – 10 years after graduating. Yes it all was difficult but worth it now.

Don’t be so bent on creating a perfect world for your kid, because sooner or later he’s going to have to go it on his own.

Hey Sojourner, I must disagree with your assessment of the situation, I am most certainly not contrairian. I agree that there is a housing bubble ready to deflate. I just disagree with some of the populist "wall off Mexico" crap because I understand that national policy must be pragmatic. Why don't you give us your opinion?

Housing bust? I think not says the most influential value investor in U.S. history. "I think the housing bubble is the most overdone non event of this century, the exact opposite of what I thought during the dot com boom. The media has scared the wits out of people" claims the oracle of Omaha in a rare interview with CNBC's Maria Bartiromo on Wednesday at the Friar's Club of Manhattan. "I'm a value oriented investor and I like tangible assets, and I don't see what all the fuss is about. For most people, their house is the best investment they will make in their life. In my humble opinion, now is as good of time as any for the typical American to invest in a home if they want to, interest rates are near all time lows, and there are some great values out there."........

Thinker, your overdeveloped ego really comes out in your posts. They are often pedantic and irritating. Although your beliefs seem to mostly fall in line with the HP norm, please refrain from flamboyantly pointing out small deviations that you seem so proud of.

A "heavy hitter" such as yourself should know better.

BTW - I agree with you that there is a housing bubble ready to deflate and that illegal immigration is overplayed.

Housing SchizophreniaThe homebuilders and the Realtors give very different reads on housing's health. THE MOTLEY FOOL

Updated: 6:25 a.m. PT May 16, 2007To all of the various problems affecting U.S. housing, we can now add a case of schizophrenia.

The most widely watched housing authorities -- the National Association of Homebuilders and the National Association of Realtors-- appear to be gazing into completely different crystal balls. On Tuesday, the folks in the Realtors' group, adorned in their most stylish rose-colored glasses, released a report stating that "the data shows a broad stabilization." As senior economist Lawrence Yun explained further, "... we see that the existing-home market is stabilizing in a broad cyclical trough and moving in the right direction, with a modest gain from the fourth quarter." Uh-huh.

But on the very same day, the builders' organization across town noted that "homebuilder confidence sank to a 15-year low in May as lenders made it more difficult for borrowers to qualify for mortgages and order cancellations mounted." As a result, its Housing Market index descended to a reading of 30, versus 33 in April. As the group said in releasing May's results, "Readings below 50 mean more builders view market conditions as poor rather than favorable."

And as if these divergent opinions weren't enough, the U.S. Commerce Department reported on Wednesday that construction of new homes and apartments rose by 2.5% in April, but still remained nearly 26% below the year-ago level. At the same time, April permits were down 8.9%, clearly substantiating the NAHB group's sentiment.

Furthermore, national builders including Pulte (NYSE: PHM), Beazer (NYSE: BZH), and Centex (NYSE: CTX) refuse to forecast their 2007 results in the face of market uncertainty. And in prereleasing its quarterly results last week, luxury builder Toll Brothers (NYSE: TOL) said that "the impact of stricter lending standards arising from problems in [the subprime mortgage] market is negatively affecting affordability at lower price points." The result, the company said, is affecting the entire "housing food chain."

So what to make of this confusing commentary? I'm inclined to credit the Realtors' relative ebullience to their need to err on the side of optimism. And while it seems to me that we could move into 2008 before we encounter tangible signs of a housing turnaround, I also believe -- given the tendency of housing stocks to anticipate market movements -- that Fools ultimately will be able to benefit from slowly building positions in the likes of Toll or Centex.

MADRID (Reuters) - A Spanish bank repossessed a house and put it up for auction complete with the mummified body of the former owner who had missed her mortgage payments, newspaper El Pais reported on Wednesday.

ADVERTISEMENT- The corpse, preserved by salty air in the seaside town of Roses after an apparent death by natural causes, was discovered by Jorge Giro, who entered the house for the first time on Saturday after buying it at the auction, El Pais said.

The dead woman, described by neighbours as having been in poor health and often absent visiting relatives in Madrid, had stopped paying her mortgage six years ago.

The unnamed bank which eventually repossessed the home never bothered to look inside before selling it.

sojourner said......Although your beliefs seem to mostly fall in line with the HP norm, please refrain from flamboyantly pointing out small deviations that you seem so proud of..._____What're you...a self-appointed moderator, trying to tell the Stinker how/what to say..."please refrain blah blah"....?

In my humble opinion, now is as good of time as any for the typical American to invest in a home if they want to, interest rates are near all time lows, and there are some great values out there."........

Maybe Dr. B has it right.._________________

++++I'm reminded of that old saying: "If you can keep your head while those around you are losing theirs, maybe you just don't understand the situation."

Anyone know a simple way to get the Utube thing to work, as it is a tool that could get the senators and congressmen back on the floor of the senate and congress listening to the arguements and debates about the issues they will vote and decide on, rather than being out hustling money to pay the corp media for the commercials that have become required to win reeelections, and also get a freedom back to the press and media?????? as less bought and sold politicians could somewhat compete??????????//

How could employees hide millions in losses and no one finds out about it for a year?

This article make one wonder how many other subprime companies are suppressing information that auditors can not finding.

OceanFirst Shuts Subprime Home Loan Unit, Top Officers Leave

OceanFirst Financial Corp., a New Jersey-based banking company, will shut its subprime mortgage business and said the unit's president resigned after defaults were hidden from top management.

The bank blamed loans it made to borrowers who weren't required to document their income, according to a presentation for investors included in a federal regulatory filing today. The mortgages covered as much as 100 percent of a property's value.

OceanFirst said some of the loans made in 2006 quickly soured, and unnamed officials at the Columbia Home Loans unit ``concealed'' the defaults until February 2007. New subprime loans were halted by the bank in March, and OceanFirst has taken $21.6 million in charges.

Federal regulators are investigating allegations that Fieldstone Investment Corp., a Columbia subprime mortgage lender that has been hard hit by rising defaults, fired its general counsel in January for accusing senior management of illegal activity.

Former Fieldstone Investment Corp general counsel filed the whistleblower complaint under the Sarbanes-Oxley Act, which is intended to protect employees who report fraudulent activity that can mislead investors in public companies.

"All I can say is we are investigating," Leni Uddyback-Fortson, a spokeswoman for the Occupational Safety and Health Administration, said yesterday.

There's much talk about various ways the government could get financial help to certain homeowners, primarily lower-income households, who can't meet their mortgage payments. We asked visitors to the Lansner on Real Estate blog if any homeowners facing foreclosure should get government aid. And the results from 870 votes cast online in what's an unscientific sample of public sentiment were stark:

* 9.2 percent: Yes * 90.8 percent: No

VISITOR COMMENTS

"Nobody forced them to sign a loan they couldn't afford in the first place."

"What the government should have done though, is controlled the lending standards over the past years."

"Let the chips fall where they may, and maybe things will "correct" enough for the hardworking sensible people who didn't fall for this nonsense to finally be able to buy a home."

"Finally something all bears and bulls can agree on."

"All fiscal conservatives (including libertarians) should break out the firearms and revolt if there is a taxpayer bailout in any way shape or form!"

"Either clean and flush the system of this irresponsible mess now and start over with more responsible standards, or just let everyone drift in a slow bleed downward in a deflationary spiral."

"If they really wanted to address this problem: (1) Make negative amortization loans illegal. (2) Make pre-payment penalties illegal. (3) Make lying on a loan application a felony."

I heard from reader PA this morning responding to what I posted yesterday about a meeting today to address the foreclosure fallout from risky financing during the boom.

Here's a bit, in PA's own words:

I am adamant--I will not spend my tax dollars bailing people out of imprudent decisions to buy in a lunatic housing market. My husband and I and our 2 kids still rent because we could not stomach the overly-inflated sale prices of houses in SD for the last 10 years (but we do wish we'd bitten the bullet 10 years ago--even then we had sticker shock). Families who fell for the hype made BAD DECISIONS. They should be RESPONSIBLE for their BAD DECISIONS. ... I think it's time to start holding people accountable...so maybe next time they will make a good decision.

PA is not alone in this opinion; I've heard it from a bunch of people and bloggers lately as governments and agencies try to sort through the mess stemming from more and more people losing their homes.

Aiful Corp., Japan's largest consumer lender by assets, may have its rating cut by Standard & Poor's after posting its first annual loss since going public in 1998.

S&P is putting Aiful's BBB+ long-term unsecured debt ratings under review for possible downgrade, the agency said in a statement today. It cited ``concern over Aiful's ability to cope with further deterioration in the business environment.''

Aiful and its three closest rivals lost a combined $14 billion in the latest fiscal year as demands for refunds of interest payments forced them to add provisions. Japan's consumer lenders are closing outlets, cutting jobs and reducing loan approvals to stem losses.

SG Mortgage MBS Classes DowngradedTwo certificates from SG Mortgage Securities Trust 2006-FRE1 have been downgraded by Moody's Investors Service. Class M-10 was downgraded from Ba1 to Ba2, and class M-11 was downgraded from Ba2 to B2. The reason for the downgrades is that credit enhancement levels may be low given the projected losses on the underlying pools, Moody's said. The transaction " has built up a large delinquency pipeline of approximately 13% in foreclosure" and real estate owned compared with the available overcollateralization, according to the rating agency. The deal consists of subprime, primarily first-lien, adjustable- and fixed-rate loans.

Fremont MBS Classes DowngradedThree classes from two Fremont Home Loan Trust deals issued in 2005 have been downgraded by Moody's Investors Service, and three classes from another deal have been has placed under review for possible downgrade. The downgrades were as follows: series 2005-1, class B-1, from Ba1 to Ba3, and class B-2, from Ba2 to B3; and series 2005-B, class M-11, from Ba1 to B2. Classes M-9, M-10, and M-11 of series 2006-B were placed on review, and Moody's confirmed the rating on one class from series 2005-1. The negative rating actions were attributed to credit enhancement levels (including excess spread) that are deemed too low in view of projected losses. The transactions are backed by first- and second-lien adjustable- and fixed-rate mortgage loans.

MASTR ABS Classes DowngradedSeven classes of certificates from two deals issued by MASTR Asset Backed Securities Trust in 2006 have been downgraded by Moody's Investors Service. The downgrades were as follows: series 2006-FRE1, class M-7, from Baa1 to Ba1, class M-8, from Baa2 to B3, and class M-9, from Baa3 to Caa3; and series 2006-FRE2, class M-8, from Baa2 to Ba2, class M-9, from Baa3 to B2, class M-10, from Ba1 to Caa1, and class M-11, from Ba2 to Caa3. The downgrades stemmed from credit enhancement levels (including excess spread) that are deemed too low in view of projected losses, Moody's said. The series 2006-FRE1 transaction is backed entirely by first lien adjustable- and fixed-rate subprime mortgage loans, while series 2006-FRE2 contains a small fraction (5.9% at closing) of second-lien subprime loans as well.

The fact that new-vehicle registrations in California suffered a much bigger drop than the national decline of 1.2% indicates how hard the state has been hit by the housing crunch, economists said. High gas prices and troubles in the sub-prime lending industry also are hurting sales.

Despite the drop in new-vehicle registrations, Toyota Motor Corp. increased its industry leading market share in California by two percentage points to 24%. Among vehicle segments, compact SUVs such as the Honda CRV and entry-level cars such as the Toyota Yaris showed the biggest gains. Full- and mid-sized SUVs recorded the biggest drops.

As much as we talk about Vegas, Phoenix and Miami as bubbles, CA has to take the cake. Affordability is worse there than anywhere else. Can you say interest only loans?

Step back from the supply side of houses (looking at listings, thinking about how much you can negotiate off) and think about the maximum amount of money you're comfortable spending a month. For me, it's $1500. That's a lot of money. It's a few dollars shy of what I currently put into my 401k a month, so clearly it's a number I can swallow and it matches up tax wise ( i.e. I don't pay taxes on $1500 now and I wouldn't if it was all going to mortgage either).

Then think about the maximum loan term you're comfortable with. For me, that's 180 payments or 15 years. I'm not interested in being in home debt until I retire, like my parents and other sheeple (that's sheep + people).

$1500 a month for 180 months at 6% adds up to a loan value of $177,775. If I were to do ~20% down payment, that means I can get a $225,000 home. That means I need to walk into the closing with about $47,000 cash for down payment, plus $2000 for an inspection, plus closing costs of about $6000. That's $55,000 of cash to buy in.

At this low price, property taxes in my county would be $170 a month, insurance about another $130 a month, and homeowners or neighborhood fees of around $150 a month (these can vary). So now we've left my comfort area of $1500 a month and we're up to $1950. Ouch. You could say that these "add on fees" take the place of my rent, which is $462.50 a month right now.

I don't think I'm cheap and I don't think I'm unreasonable. I just think that even at my seemingly high level of income, I would not be wise to purchase more than $225,000 worth of home. If you look at starter homes in my area that transfered hands in the year 2000, most of them sold for $130,000 - $200,000 if it was walking distance to metro. This makes sense to me. The asset bubble we're in does not.

Non-traditional borrowing doubled home prices in 5 years. When buyers realize they got screwed and regulators prevent people from screwing themselves, the mortgage products that enabled this price jump will evaporate along with currrent homeowners' paper gains. It will take several years for this to all play out because houses aren't valuated on a daily basis like stocks - it's only when people sell. That's an average of 5 years. By then, I'll have my $55,000 ready for closing.

The fact that new-vehicle registrations in California suffered a much bigger drop than the national decline of 1.2% indicates how hard the state has been hit by the housing crunch, economists said. High gas prices and troubles in the sub-prime lending industry also are hurting sales.

Despite the drop in new-vehicle registrations, Toyota Motor Corp. increased its industry leading market share in California by two percentage points to 24%. Among vehicle segments, compact SUVs such as the Honda CRV and entry-level cars such as the Toyota Yaris showed the biggest gains. Full- and mid-sized SUVs recorded the biggest drops.

As much as we talk about Vegas, Phoenix and Miami as bubbles, CA has to take the cake. Affordability is worse there than anywhere else. Can you say interest only loans?

These same people didn't say anything when the house ATM was really going full speed.

Now since that has ended, and they are loosing their investment dollars day-by-day, they want those who couldn't afford to buy (or knew it was just too insane) to bail them out?

Total rubbish, and an insult to hard working US citizens.

Regardless, our economy is suffering greatly, and no amount of bail-outs will fix it.

We have shipped are knowledge and well-paying jobs overseas, as well as creating descent amount the rest of the world through aneedless war - there's your "bail-out" money several times over.

Anonymous said... Fighting a Bail-Out

I heard from reader PA this morning responding to what I posted yesterday about a meeting today to address the foreclosure fallout from risky financing during the boom.

Here's a bit, in PA's own words:

I am adamant--I will not spend my tax dollars bailing people out of imprudent decisions to buy in a lunatic housing market. My husband and I and our 2 kids still rent because we could not stomach the overly-inflated sale prices of houses in SD for the last 10 years (but we do wish we'd bitten the bullet 10 years ago--even then we had sticker shock). Families who fell for the hype made BAD DECISIONS. They should be RESPONSIBLE for their BAD DECISIONS. ... I think it's time to start holding people accountable...so maybe next time they will make a good decision.

All of them hid information because it was to their financial benefit to do so.

Now, that things are falling apart,the rats are betraying one another to save their own skins.

Anonymous said... How could employees hide millions in losses and no one finds out about it for a year?

This article make one wonder how many other subprime companies are suppressing information that auditors can not finding.

OceanFirst Shuts Subprime Home Loan Unit, Top Officers Leave

OceanFirst Financial Corp., a New Jersey-based banking company, will shut its subprime mortgage business and said the unit's president resigned after defaults were hidden from top management.

The bank blamed loans it made to borrowers who weren't required to document their income, according to a presentation for investors included in a federal regulatory filing today. The mortgages covered as much as 100 percent of a property's value.

OceanFirst said some of the loans made in 2006 quickly soured, and unnamed officials at the Columbia Home Loans unit ``concealed'' the defaults until February 2007. New subprime loans were halted by the bank in March, and OceanFirst has taken $21.6 million in charges.

"Greed and Fear" and the "Path of less Resistance" is what drive the economy. This is true fundamental of economic.

Fear at the local level will be the next stage of slow down in the housing cycle as more and more construction and financial service jobs will lost due to local politic.

In a time of a housing slow down, residents one by one will line up to voice their concern to local city councils to protect the environment while hiding their true fear that in increase supply could impact their properties value.

In time of fear, local politician will do what is best to protect their jobs instead of what is right to protect their local economy.

During time of fear voice of logic will be flooded out by voice of anguish as fear plays on more fear.

San Jose rejects plan to build housing on industrial land in Evergreen

The San Jose City Council rejected a proposal Tuesday night to build homes on land set aside for future industrial growth in the city's Evergreen district and voted to require industrial development before housing in the surrounding area.

The city is considering similar industrial growth "triggers" as it contemplates development in Coyote Valley in southern San Jose.

Iowa's unemployment rate was three-point-four percent in April, up slightly to 3.2 percent. Labor analyst Ann Wagner of Iowa Workforce Development says a dip in construction jobs helped push the rate up. Wagner says construction has been doing very well, hitting peak employment last year, but in April there was a sudden drop of 2,000 jobs.

Wagner says they're not sure if the drop is one-month anomaly or if it's linked to the slowdown in housing. Wagner says it'll take another month to see if the drop in construction jobs is a trend. She says the release of the May data should show if there's a downturn in construction or if some major projects had ended. Wagner says they'll monitor the issue as the drop "is unusual."

K. W. - Southern Ca. said... You stated ... "Most Americans are too lazy to educate themselves and give themselves a fighting chance to be among the wealthy as the rules continue to change."

Many americans *are not* lazy, and are just trying to survive from being pulled under. The rules change to benefit *only* the wealthy these days - which is why our economy is in the crisis it is.=====Allow me to amend my statement.

Most Americans are too lazy AND/OR STUPID to educate themselves and give themselves a fighting chance to be among the wealthy as the rules continue to change.

There are still plenty of ways for a middle-class person to become wealthy. But I know it's far easier to sit there with a victim mentality and say everything is set up for the rich, no one else has a fighting chance.

TINKER ALERT...superheated fuels burn 5 times more efficiently........... something about tubing around radiators into combustion chambers?? sounded like gasoline at 80 cents a gallon again, and more propaganda hidden? by the notice of more oil than all the mideast kings found under public land in the rockies, till the land theft is accomplished?????????

I heard a radio ad today for William Lyon Homes "Twin Oaks at Whitney Ranch" advertising discounts of $120, 000 this weekend. Previously the builders around here (Rocklin, CA in Placer County) were only advertising free appliances, cars, landscaping, etc. This is the first actual big discount I have heard advertised. A trend? I hope so.

The agent says details of a triple murder and suicide would have been disclosed if they asked.

Stephen Hudak | Sentinel Staff WriterPosted May 19, 2007

Eerie surprise (TOM BENITEZ, ORLANDO SENTINEL)May 12, 2007

CASSIA -- The three-bedroom, two-bathroom house in rural Lake County offered everything Christina Johnson and her parents were looking for, including a pool and land for a horse.

But on May 1, the day the family began moving in, they learned a more unsettling feature of the house in the Royal Trails subdivision. It had been the scene of one of Lake County's most notorious crimes: a triple murder and suicide that rocked the Eustis Police Department.

"There was no way we could ever stay here," said Johnson, standing in the master bedroom where three of the four died. "It would be like living in a morgue."

Though the slayings by Eustis police Cpl. Michael Mount received substantial media coverage in Central Florida, the Palm Coast family hadn't heard about the Feb. 5, 2006, tragedy until a new neighbor casually mentioned it.

They think the realty company that received an $11,350 commission should have told them.

Johnson, 24, and her parents, John and Kathy Johnson, are stuck with the $227,000 ranch house where the jealous police officer shot his estranged wife, Kim; fellow officer Joe Gomez; and Gomez' wife, Serena, before turning the gun on himself.

Brokers at Beard Pippin Properties Inc., were silent because Florida law allows them to be.

The 2003 law, introduced by state Sen. Bill Posey, a Rockledge Republican and Realtor, says: "[t]he fact that a property was, or was at any time suspected to have been, the site of a homicide, suicide, or death is not a material fact that must be disclosed in a real estate transaction."

Most states require home sellers and real-estate agents to disclose known defects that could diminish the value of a house, but not past tragedies that may stigmatize the property.

The National Association of Realtors' code of ethics requires its members to reveal all material factors that may affect the desirability of a property, "but psychological factors are a gray area," said Walt Molony, a spokesman.

"Personally, if it was me, if I was a person of faith, I would have somebody come and bless the place," he said. "I'm serious."

Homes rumored to be haunted or tainted by murder, suicide and other scandals take longer to sell and fetch prices slightly under market value, according to a study of 102 stigmatized homes by James Larsen, a finance professor at Wright State University in Ohio.

"Some stuff creeps people out," Larsen said in a telephone interview.

The three-bedroom house on Telford Lane in Deltona, where six friends were bludgeoned to death Aug. 6, 2004, sold nine months later for $112,000, about $70,000 under market value.

Real-estate broker Kimberly Haney said she couldn't keep its history a secret. The massacre made international news.

Though most customers had heard of the killings, some were unaware of the crime's precise venue until she told them. Some immediately lost interest in the bargain-priced property.

"I didn't get any heebie-jeebie feeling when I went into the Telford house. There was no evidence of any crime there," said Haney, who now works for Prudential Properties in Orange City. "But ethically, anything that would affect the person moving in, I kind of want to tell them about it. I kind of go to extremes. I . . . [point out] pedophiles in a neighborhood. . . . I want my customers to come back because they're very happy."

The buyer of the Deltona home, Dayna Gardner, fixed it up and leases it. She said she has had two tenants, both of whom knew what happened there and who pay market-value rent.

While Florida's law allows brokers to be mum, South Dakota requires sellers to disclose if a homicide has been committed recently on the property and Georgia requires sellers to answer a prospective buyer's query truthfully.

Posey said Florida's law was drafted to protect brokers who are unaware of a home's dark secrets.

Most of us are victims here - this (most destructive in the history of presidents) president made sure of that.

The "game" - as you well know - is rigged for the few at the top.

No whining here, just stating fact.

Another question we have to ask ourselves is why the emphasis in this country focuses mainly on "self", instead of the whole.

Anonymous said... K. W. - Southern Ca. said... You stated ... "Most Americans are too lazy to educate themselves and give themselves a fighting chance to be among the wealthy as the rules continue to change."

Many americans *are not* lazy, and are just trying to survive from being pulled under. The rules change to benefit *only* the wealthy these days - which is why our economy is in the crisis it is.=====Allow me to amend my statement.

Most Americans are too lazy AND/OR STUPID to educate themselves and give themselves a fighting chance to be among the wealthy as the rules continue to change.

There are still plenty of ways for a middle-class person to become wealthy. But I know it's far easier to sit there with a victim mentality and say everything is set up for the rich, no one else has a fighting chance.

Since housing prices across the nation were so over-priced, they will need to fall greatly to get back to realistic pricing.

Housing should never have become speculative like it is, where pricing far out-paced annual salaries for most.

Now we're seeing the hard way why such pricing cannot be sustainable over the long-term.

Zoe said... I heard a radio ad today for William Lyon Homes "Twin Oaks at Whitney Ranch" advertising discounts of $120, 000 this weekend. Previously the builders around here (Rocklin, CA in Placer County) were only advertising free appliances, cars, landscaping, etc. This is the first actual big discount I have heard advertised. A trend? I hope so.

(I doubt this belly up was primarily due to housing slowdown. More likely due to a company owner's bad mgt because they sold wood pellets too which are on the upswing because alternative is natural gas, oil or propane for heating.)

The disturbing trend is many people with good wages are now holding off on purchasing a home - and for very good reason - it's financial suicide to do so now.

Who will be our first-time home buyers in the years to come if this trend continues to grow?

westwest888 said... Step back from the supply side of houses (looking at listings, thinking about how much you can negotiate off) and think about the maximum amount of money you're comfortable spending a month. For me, it's $1500. That's a lot of money. It's a few dollars shy of what I currently put into my 401k a month, so clearly it's a number I can swallow and it matches up tax wise ( i.e. I don't pay taxes on $1500 now and I wouldn't if it was all going to mortgage either).

Then think about the maximum loan term you're comfortable with. For me, that's 180 payments or 15 years. I'm not interested in being in home debt until I retire, like my parents and other sheeple (that's sheep + people).

$1500 a month for 180 months at 6% adds up to a loan value of $177,775. If I were to do ~20% down payment, that means I can get a $225,000 home. That means I need to walk into the closing with about $47,000 cash for down payment, plus $2000 for an inspection, plus closing costs of about $6000. That's $55,000 of cash to buy in.

At this low price, property taxes in my county would be $170 a month, insurance about another $130 a month, and homeowners or neighborhood fees of around $150 a month (these can vary). So now we've left my comfort area of $1500 a month and we're up to $1950. Ouch. You could say that these "add on fees" take the place of my rent, which is $462.50 a month right now.

I don't think I'm cheap and I don't think I'm unreasonable. I just think that even at my seemingly high level of income, I would not be wise to purchase more than $225,000 worth of home. If you look at starter homes in my area that transfered hands in the year 2000, most of them sold for $130,000 - $200,000 if it was walking distance to metro. This makes sense to me. The asset bubble we're in does not.

Non-traditional borrowing doubled home prices in 5 years. When buyers realize they got screwed and regulators prevent people from screwing themselves, the mortgage products that enabled this price jump will evaporate along with currrent homeowners' paper gains. It will take several years for this to all play out because houses aren't valuated on a daily basis like stocks - it's only when people sell. That's an average of 5 years. By then, I'll have my $55,000 ready for closing.

The United States Department of Agriculture is spending taxpayer money to run Spanish-language television ads encouraging illegal immigrants to apply for government-financed food stamps.

From the USDA Website Medicaid's Required Documentation of Citizenship; Its Effect on the Food Stamp Program

10 Myths and Facts about Food Stamp Benefits and Immigrants

Food Stamp Outreach Toolkit for Retail Stores The federal agency, which claims to provide leadership on food, agriculture and natural resources based on sound public policy, is working to promote its food stamp program in the Latino communities with a costly series of ads on the nation’s largest Spanish-language network, Los Angeles-based Univision.

The number of unemployed people in Volusia and Flagler counties stopped climbing in April, after several months of job losses blamed on the construction industry, according to employment figures released Friday.

Local construction firms added 400 jobs in April after hiring 800 new workers in March, according to the department's monthly jobs report.

Christopher Thornberg, economist with Beacon Economics, a research firm with offices in Los Angeles and Marin counties, said that after seasonal fluctuations were taken into account, construction employment was virtually flat in April, showing a 0.02 percent decline.

“Even though housing starts have been collapsing, there are still condos being built – or at least in the last stage of completion,” he said.

“Also, you have to realize that the first round of people who are being laid off are not people who show up in the employment numbers, which are based on payroll figures.

The first round of layoffs include a lot of illegal immigrants. And if you want to see how that's going, just go to the parking lot of your local Home Depot and see how many people are looking for work.”

Speculators who have held back on selling now bear heavy costs. According to the U.S. Commerce Department, the number of vacant homes for sale in Florida doubled last year to 4.3 percent of the state’s total housing stock. That’s the highest vacancy rate in the country. As more speculators throw in the towel, Florida housing prices may have much farther to fall.

I was bored so I did a census on Craigslist. Thanks to a high speed internet connection I quickly surveyed all the cities to find out which one had the most number of items for sale. I figured it would be a combination of a large city that was economically in trouble. So, who's the winner?

I'm fed up with the U.S. This new illegal alien bill has really got to me. They are already spending our tax money on heart operations for illegals, and educating their kids. Just look at all the crime the illegals commit. Who is selling and importing most of the drugs?

I just got my passport, and $40,00 in travelers checks, and I'm heading to Argentina. If I don't like it there, I'll go to So. Asia.

This congress and Bush are the worst. Building Iraqi schools and giving them money while we can't even give our own kids a good education is pathetic. Making Iraq safe while our streets aren't, and look at those poor people in New Orleans! They still don't have a place to live. And they are Americans!

This country is for and by the corporations. They don't care about us. Just look at the ARM mortgage traps they swindled millions into taking. Greenspan allowed the Fed. to deregulate them to legalize the theft. And he's a Knight of the British Isles! Give me a break. He should be on trial for theft!

I wish I could have all the tax money I gave them back, with interest. Not to mention the 4 years I spent in the U.S.M.C.

I'm mad as hell and can't take it any more! Let the illegals take my place! See if they defend this country! American democracy is a world wide joke. Just like the U.S. dollar!

U.S. Automakers Urge G-7 Finance Ministers to put Misaligned Japanese Yen on Agenda

Stephen J. Collins, President of the Automotive Trade Policy Council (ATPC), speaking on behalf of General Motors, Ford and DaimlerChrysler, urged G7 finance ministers to engage in a “frank and long overdue discussion” of the damaging effects of the weak yen during their May 18-19 meeting in Potsdam, Germany.

Collins said that Congress has given notice that it will not stand aside if the U.S. government continues to turn a blind eye to Japan's beggar-thy-neighbor currency and trade practices. Yesterday (May 17), House of Representatives Ways and Means Committee Chairman Charles Rangel (D-NY) and Trade Subcommittee Chairman Sander Levin (D-MI) sent a letter to U.S. Trade Representative Susan Schwab asking Schwab to “consider taking action” to get Japan to raise the value of the yen.

The imbalanced Japanese yen was also a central topic of discussion at an unusual tri-partite Congressional last week conducted jointly by the House Committee on Ways and Means, Subcommittee on Trade; the Committee on Financial Services, Subcommittee on Domestic and International Monetary Policy, Trade and Technology; and the Committee on Energy and Commerce, Subcommittee on Commerce, Trade and Consumer Protection.

“There is a growing consensus around the world that Japan must take action to realign the yen to a level that represents its true economic value,” said Collins. “When U.S. Treasury officials join their G-7 counterparts in Potsdam this weekend, they have yet another opportunity to confront an issue that economists from around the world are coming to view as a growing threat to the global economy.”

“Japan spent over $500 billion purchasing dollars to successfully push down the value of the yen and now is trying to convince the world that its weak yen is a result of free market forces,” said Collins. “The fact is that currencies ranging from the Euro and the British pound to the Canadian dollar and Korean won have all risen against the U.S. dollar while the yen has hit twenty year lows against the dollar. The numbers just don’t add up to a yen that reflects free market forces at work.”

The San Francisco Chronicle today reported "Bay Area's housing prices buck national trend", but that is just not true. In fact, it's an outright lie, and it make you wonder just how much the realtor advertising money it took to get the Chronicle to spin the headline that way. I think the Chronicle sold its integrity way too cheaply.

Asking prices have fallen in the Bay Area over the last year, and they are still falling. So how can the Chronicle report something like that and get away with it? The answer lies in the definition of the "median sales price".

The median sales price is defined as the number in the middle of sales. Half of houses sold for more than the median, and half sold for less. Houses that don't sell are ignored. No sale, no price! So what happens if the lower half of houses just don't sell at all this year? Ah, now the median is just the number in the middle of what used to be the upper half of the market.

Voila! Prices fall all around you, in fact, they fall for every single house in the Bay Area, but when you just don't sell any houses below, say, $500,000, the median rises. It's like magic, no?

In fact, we can easily raise the median income of the Bay Area the same way, even if everyone gets poorer! All we have to do is fire everyone who makes less than the old median. If we stop counting them because they have no income (like the housing statistics ignore houses that did not sell) then we could have a $10,000 drop in the income of every person still employed, and yet show that the median rose!

The sad truth is that the realtors and papers are desperate to get you to sign away your life's earnings in a falling market. Don't do it! It's a horrible time to buy. Patience will be rewarded.

Billions upon billions of dollars spent to protect the interests of the upper elite in this country, while making the situation worse within and outside of our borders.

There is no word bad enough to describe how terrible this administration has been since Bush stole office.

Those who voted for them - including several of my peers - are now seeing the long-term damage brought onto the American people.

Anonymous said... I'm fed up with the U.S. This new illegal alien bill has really got to me. They are already spending our tax money on heart operations for illegals, and educating their kids. Just look at all the crime the illegals commit. Who is selling and importing most of the drugs?

I just got my passport, and $40,00 in travelers checks, and I'm heading to Argentina. If I don't like it there, I'll go to So. Asia.

This congress and Bush are the worst. Building Iraqi schools and giving them money while we can't even give our own kids a good education is pathetic. Making Iraq safe while our streets aren't, and look at those poor people in New Orleans! They still don't have a place to live. And they are Americans!

This country is for and by the corporations. They don't care about us. Just look at the ARM mortgage traps they swindled millions into taking. Greenspan allowed the Fed. to deregulate them to legalize the theft. And he's a Knight of the British Isles! Give me a break. He should be on trial for theft!

I wish I could have all the tax money I gave them back, with interest. Not to mention the 4 years I spent in the U.S.M.C.

I'm mad as hell and can't take it any more! Let the illegals take my place! See if they defend this country! American democracy is a world wide joke. Just like the U.S. dollar!

As quoted in the article - thistells it like it is:"Tens of billions of dollars have already been lost in the U.S. sub-prime lending market and the contagion is spreading as the media tries to cover-up what is really going on," Chapmen wrote in his March 28 newsletter. "We are watching the disintegration to an extent of the entire mortgage market, which encompasses 25 percent of all outstanding credit."

is it just me or is no one else noticing or am i just hardheaded and still shopping for groceries and whatnots. yesterday, saturday, i did my dutiful weekend shopping and as I went to Costo the lines for gas were a little shorter (this is like 2 in the afternoon) there were still plenty of big cars, trucks and suv's but then maybe the lines grow in spurts so that is not any indicator (hum) but as i walked around costco at around 2 in the afternoon there were hardly any customers and the exit lines were short (now this is three days after payday with the 15th being a payday) then i went over to a clothing store to look at some goodies that i surely don't need, the selection of discounted clothes equaled the clothes that were not discounted and the selection of regular prices clothes was enormus. usually you can't find anything in my hysteria i bought almost everything (i slapped my self on the back of my hand bad bad bad) and then i went over to wallyworld (walmart) and at 3:30 3:45 on a saturday afternoon 3 days after payday (assuming it is the 15th and it is a beautiful glorius day in nor cali) that store was practically empty usually on days like this the lines are backed in to the jr's sections mexicans with mobs of kids everyone speaking spanish no one speaking english in earshot tired husbands holding babies fat pregnant wives (mexicans of course because americans can breed too but the cost is to draining something mexicans don't know this because they haven't been here long enough to know this country does come with a price, everything is expensive and both have to work because everything is so expensive. it was then i said to myself (and this was not the first time i noticed this) something terribe is going on (god forbid) maybe mexicans are going casa or they don't have jobs to shop at wallyworld, costco is too expensive let's face it they should be called the 100 dollar store cause you can't get out of there with spending that much, or there is something really sinister going on with our economy that will be slapping us in the face and we don't know it's happening until it gets here. if these mexicans don't have jobs (in construction and mowing your lawn) what is going to happen with all these houses they have bought and with no money to pay the mortgage and no money to fill up a ford windstar van 55 bucks in no cali my truck was 55 and now i am back to my plymouth neon 32 bucks and that is ridiculous for a 8 year old car. what pray tell is lurking in the darkness of the government offices crunching the numbers late at night. bad news i surmise. i live close to the wine valley plenty of the illegals there. Something stinks and it behooves everyone to take a look at their real surroundings and starting adding up your own numbers. As a side issue my son asked me mommy if the locust are a swarm and more come in what is it then considered I was wrong he said it was a plague and I said sound like MEXICANS to me. LOL this country no matter how rich can not sustain an invasion of 20-50 (i say 50 the goverment never tells the truth) million new people who never paid into any of the programs they now abuse as if they were designed for them including housing. Every body had better batten down their hatches get rid of those bills and start stocking up on food products because it looks like it is going to get ugly. Was I the the only one who saw the commerical on late night tv trying to get folks to send some company all their gold JUST SITTING AROUND the house and they will give you back what they think it is worth. Buying up the gold supply so that they (the top one percent) will have it. I am no economist just me but after reading these web sites they have clued me what to watch for not money data but little incidents in the world around me. so read listen and beware, if Bush can send all those kids into Iraq knowing they will be killed or maimed wanting to stay the course and want more (they are going to start that draft trust me) he has so much money he won't be suffering when the world crashes. He is not the anti-christ and I don't know who is but if it can be this bad and he is not the anti-christ can you imagine how it will be when it is the anti-christ. The signs are starting to show. It's called birthing pains. think i am a negative doomsdayer check out www.dissidentvoice.org/2007/05/are-we-headed-for-another-great-depression/Happy Shopping to you all!!!!